Publication Type
PhD Dissertation
Version
publishedVersion
Publication Date
3-2018
Abstract
This dissertation studies the impact of credit rating on firms’ financing behavior and investigates insider trading activities.
The first essay documents how firms’ concerns about credit rating change affect their choice between the use of debt and lease. Firms approaching a credit rating change tend to use less debt relative to operating leases to finance their new projects. In this paper, I propose a new method of measuring the potential of a credit rating change. Using the new measures, I find that not only the concerns about being downgraded but also the at- tempts to get upgraded have significant impacts. The result is surprising because rating agencies are fully aware of firms’ use of off-balance-sheet finance and make correspond- ing adjustments when they assess firms’ creditworthiness. There are two possible reasons for the result. First, the operating lease obligations are usually underestimated. Second, auditors tolerate more misstatement for disclosed off-balance-sheet items than they do for recognized balance sheet items.
Keywords
Credit Rating, Off-balance-sheet Finance, Corporate Governance, Board of Directors, Insider Trading
Degree Awarded
PhD in Business (Finance)
Discipline
Corporate Finance
Supervisor(s)
WANG, Rong; FU, Fangjian
Publisher
Singapore Management University
City or Country
Singapore
Citation
GAO, Meng.
Essays in corporate finance. (2018).
Available at: https://ink.library.smu.edu.sg/etd_coll/169
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.